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GDP is estimated to have grown by over 4% in 2017 but is projected to slow somewhat in 2018-19. Domestic demand is driving growth, underpinned by rising social transfers, an increasingly tight labour market and an investment recovery led by faster disbursements of EU structural funds. Inflation will gradually increase in line with accelerating wages.
Public spending is increasing, reflecting rising social transfers, the recent decision to lower the retirement age and an increase in investment, suggesting a need for additional revenues. Given the economy's strength and the increased spending, now is a good time for tax reform. Monetary policy is assumed to tighten gradually from early-2018 to mitigate inflationary pressures. To address demographic challenges, policies should aim at increasing labour force participation and making Poland more attractive for workers of both Polish and foreign origin.
Bank profitability has declined, reflecting depressed interest margins as well as tax and regulatory changes. The potential compensation imposed on banks for the holders of foreign-currency-denominated mortgages may further erode their profitability. Ensuring a swift implementation of the Financial Stability Committee's recommendations would help alleviate regulatory uncertainty.
Economic Survey of Poland (survey page)